Bonds: Total Market


Despite strong rebellion from his own Syriza party, Greek PM Alex Tsipras managed to pass the bailout package he negotiated through Greece’s parliament. 29 members of his own party voted against him, but with strong support from both the opposition and his own party, 229 members out of 300 voted for the bailout package. Tsipras gave his views on the agreement he made with European lawmakers, saying “I don’t believe the measures will benefit the economy, but we are forced to adopt them”. Tsipras now faces a crisis of confidence and it is unclear how much longer he can stay in power without calling new elections.

FINSUM: So Greece did its part of the negotiations—collapsing at the feet of its creditors and then forcing through painful austerity cuts. The IMF seems to be in the wind over the deal, demanding debt forgiveness. The whole situation seems quite uncertain.

Source: Wall Street Journal


A respected columnist for the Financial Times, Wolfgang Munchau, who is notably German, writes that Greece’s creditors have destroyed the Eurozone. In a particularly harsh critique of his native country, Munchau explains that the complete capitulation Greece’s creditors, led by Germany, forced on Athens signaled the death of democracy and the emergence of a reign of fear across the Eurozone. Munchau explains that the negotiations laid bare the fact that the Eurozone is not held together by a political commitment to a shared future, but by the overwhelming fear of destitution that would occur if one were to leave. Using this understanding, Munchau explains that no problems have been solved, despite the current bailout package going to Greece. Munchau says that the political commitment to the Eurozone has now been undermined, and the fundamental reason the currency was formed is now gone; a fact which he says will lead to continuing problems. In his own words, “In doing so {bullying Greece} they reverted to the nationalist European power struggles of the 19th and early 20th century. They demoted the Eurozone into a toxic fixed exchange-rate system, with a shared single currency, run in the interests of Germany, held together by the threat of absolute destitution for those who challenge the prevailing order”.

FINSUM: This is quite an article. The piece captures the sad day this deal represents for the future of the EU and the Eurozone …. PS, this deal is a long way from done given the Greeks still need to approve it at home, something Tsipras is going to have to rely on his opposition to do because his own party is so angry with him.

Source: Financial Times


At the end of last week Fed chairwoman Janet Yellen made some important comments. Speaking in Cleveland, she said that she still thinks it will be “appropriate” for the Fed to take the “initial step” to raise rates and begin normalizing monetary policy in 2015. The comments are significant because it is the first time she has spoken since Greece descended into chaos and the Chinese market rout ensued. Overall, the speech gave no indication that the Fed had shifted from its previous stated course, though she did say that the labour market had some persistent slack.

FINSUM: Bluff…It seems very doubtful the Fed will raise rate given the uncertainty over how current issues, especially in China, will impact the global economy.

Source: Wall Street Journal

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